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BOX 6.14 Export Plans Foiled by Failure to Obtain Import Licence A Sri Lankan company, Chalpal Textiles, made a contract with a British Columbian manufacturer

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BOX 6.14 Export Plans Foiled by Failure to Obtain Import Licence A Sri Lankan company, Chalpal Textiles, made a contract with a British Columbian manufacturer of textiles, BC Textiles Ltd, to buy a large number of used textile-finishing machines. Under the terms of the contract, Chalpal agreed to use its best efforts to obtain the necessary import licence for the equipment. One month after the contract was made but the week before Chalpal filed its application for the import licence, the Sri Lankan government decided to limit import licences for used equipment in an attempt to encourage its nationals to buy only "state of the art" equipment. Chalpal notified BC Textiles of the difficulty and advised it that, although it had made every reasonable attempt to obtain an import licence, the freeze on licences for used equipment appeared to be in effect for the foresee- able future. BC Textiles wishes to sue for breach of contract, and Chalpal claims frustration of contract. Assum- ing that BC law applies, what will be the outcome? Would the outcome be any different under the CISG? A force majeure clause that itemized failure to obtain the necessary import licence would have settled the issue. These facts raise another potential difficulty between the parties: the issue of the level of effort one party might reasonably expect of the other in meeting an obligation

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